Huawei is feeling the effects of US sanctions, records first quarterly revenue decline
A sign of things to come?By Rob Thubron 9 comments
Why it matters: Over a year after Donald Trump added the company to an export blacklist, Huawei is feeling the bite of sanctions after its quarterly revenue shrank for the first time. Sales and profit were up for all of 2020, albeit only slightly, but the fourth-quarter decline could continue throughout 2021.
It was back in May 2019 when Trump added Huawei and 70 affiliates to the Bureau of Industry and Security (BIS) Entity List, ensuring US companies could no longer do business with these firms without a license. It led to Google's apps and services no longer appearing on the Chinese giant's new products, making them less appealing to western consumers.
Thanks to its popularity in China and other markets, the sanctions against Huawei weren't felt straight away. But the company just had its most difficult year to date and saw its quarterly revenue fall YoY for the first time on record. Q4 2020 was down 11% to 220.1 billion yuan ($33.5 billion), while the previous quarter experienced 3.7% growth and Q2 was up 23%, writes Bloomberg.
Full-year sales and profit were actually up marginally, 3.8% and 3.2%, respectively. The company puts this down to record 5G base station orders and solid mobile sales in the first half of 2020, offsetting the final six months.
"The supply restrictions for our smartphone business has caused us a great impact, and we haven't been able to see a clear picture in the supply for our smartphones," said Ken Hu, one of Huawei's three deputy chairmen. "We think this is a very unfair situation to Huawei, and it has caused a lot of damage to us."
President Biden's administration isn't easing the pressure on Huawei. It's led the company to other revenue sources, including creating tech for healthcare, coal mining, and even pig farming. There are rumors it is also eying the self-driving vehicle industry.
Earlier this month, Huawei, which owns the world's most extensive portfolio of 5G patents (3,007), said it would start charging companies such as Apple and Samsung for using them in their mobile products.